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AGENDA ITEM COVER PAGE
File ID: #2334
Resolution
Sponsored by: Vice Chair Ken Russell
A RESOLUTION OF THE MIAMI CITY COMMISSION, WITH ATTACHMENT(S), DIRECTING
THE CITY MANAGER TO ISSUE A NOTICE OF DEFAULT TO FLAGSTONE ISLAND
GARDENS, LLC ("FLAGSTONE") OF THE AMENDED AND RESTATED AGREEMENT TO
ENTER INTO GROUND LEASE ("AMENDED AND RESTATED AGREEMENT TO ENTER")
AND THE AMENDED AND RESTATED GROUND LEASE(S) ("AMENDED AND RESTATED
GROUND LEASES') AS APPLICABLE, DUE TO FAILURE TO COMMENCE CONSTRUCTION
AS REQUIRED BY THESE AGREEMENTS AND OTHER GROUNDS STATED HEREIN; AND
FURTHER DIRECTING THAT THE CITY ATTORNEY AND INDEPENDENT AUDITOR
GENERAL CONDUCT AN ANALYSIS OF THESE AND ANY OTHER RELATED
AGREEMENTS WITH FLAGSTONE TO DETERMINE IF THERE ARE OTHER BREACHES.
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City of Miami
City Hall
3500 Pan American Drive
Legislation Miami, FL 33133
s,� 4 www.miamigov.com
Resolution
Enactment Number: R-17-0263
File Number: 2334 Final Action Date -5/30/2017
A RESOLUTION OF THE MIAMI CITY COMMISSION, WITH ATTACHMENT(S),
DIRECTING THE CITY MANAGER TO ISSUE A NOTICE OF DEFAULT TO
FLAGSTONE ISLAND GARDENS, LLC ("FLAGSTONE") OF THE AMENDED AND
RESTATED AGREEMENT TO ENTER INTO GROUND LEASE ("AMENDED AND
RESTATED AGREEMENT TO ENTER") AND THE AMENDED AND RESTATED
GROUND LEASE(S) ("AMENDED AND RESTATED GROUND LEASES") AS
APPLICABLE, DUE TO FAILURE TO COMMENCE CONSTRUCTION AS REQUIRED
BY THESE AGREEMENTS AND OTHER GROUNDS STATED HEREIN; AND
FURTHER DIRECTING THAT THE CITY ATTORNEY AND INDEPENDENT AUDITOR
GENERAL CONDUCT AN ANALYSIS OF THESE AND ANY OTHER RELATED
AGREEMENTS WITH FLAGSTONE TO DETERMINE IF THERE ARE OTHER
BREACHES.
WHEREAS, the City of Miami ("City") owns certain real property at approximately 1050
MacArthur Causeway, Miami, Florida ("Property"); and
WHEREAS, pursuant to applicable competitive solicitation processes, Flagstone Island
Gardens, LLC ("Flagstone") was selected as the most qualified, responsive, and responsible
bidder to develop and lease a mega -yacht marina and ancillary facilities such as retail, parking,
hotels, and other related facilities on the Property ("Project"); and
WHEREAS, the Miami City Commission, pursuant to Resolution No. 01-972, adopted on
September 17, 2001, and Resolution No. 01-1028, adopted September 25, 2001, polled the
electors of the City regarding leasing the Property to Flagstone for the Project and the voters
approved the Project by an affirmative vote; and
WHEREAS, pursuant to Resolution No. 02-1304, adopted on December 12, 2002, the
City and Flagstone entered into an Agreement to Enter into a Ground Lease ("Agreement to
Enter") and a form of proposed Ground Lease ("Ground Lease") dated January 1, 2003, with
exhibits and attachments; and
WHEREAS, subsequently, the City and Flagstone entered into certain Amendments to
the above referenced Agreements; and
WHEREAS, the parties thereafter, by Resolution No. 10-0402, adopted on September
23, 2010, entered into an Amended and Restated Agreement to Enter into Ground Lease
("Amended and Restated Agreement to Enter") and an Amended and Restated Ground
Lease(s) ("Amended and Restated Ground Leases") dated February 1, 2010; and
WHEREAS, the Project is a phased project consisting of Phase 1 - the Marina; Phase 2
— Retail/Parking; Phase 3 - Hotel 1; and Phase 4 - Hotel 4; and
WHEREAS, Flagstone and the City entered into the Amended and Restated Ground
Lease for the Retail/Parking Phase in August, 2016; and
WHEREAS, the deadline to commence construction of the Retail/Parking Phase [as
extended by Force Majeure and State of Florida Executive Order 15-173, which tolled all
Development Permits for sixty (60) days and six (6) months], was May 1, 2017; and
WHEREAS, Composite Attachment 3 approved by Resolution No. 10-0402, adopted
September 23, 2010, and incorporated by reference in the Amended and Restated Ground
Lease for the Retail/Parking Phase, defines "Commence Construction" or "Starts Construction"
to mean that "all material plans and permits are approved and the act of physical construction
has begun," as depicted in Exhibit "A," an excerpt from Composite Attachment 3, attached and
incorporated; and
WHEREAS, the Agreement to Enter continues in effect and supercedes the contrary
provisions in the Ground Lease;
NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF
MIAMI, FLORIDA:
Section 1. The recitals and findings contained in the Preamble to this Resolution are
adopted by reference and incorporated as if fully set forth in this Section.
Section 2. The City Manager is directed to issue a Notice of Default to Flagstone as to
Flagstone's failure to perform any covenants, conditions, or agreements of the Amended and
Restated Ground Lease, including, without limitation, the Agreement to Enter, the Amended and
Restated Ground Lease for Retail/Parking and Composite Attachment 3, as applicable. These
include the following:
(a) Failure to commence or start construction of the Retail/Parking components in the
manner required pursuant to Attachment 3;
(b) Failure to close on construction loans, as required pursuant to Section 6.1.2 of the
Agreement to Enter; and
(c) Failure to comply with the Financial Resources and evaluation of Project
requirements pursuant to Section 12.1.2 of the Agreement to Enter.
Section 3. The City Manager is further directed to issue a Notice of Default stating, with
particularity, the respects in which the City, as the Lessor, contends that Flagstone, as the
Lessee, has failed to perform.
Section 4. The Office of the City Attorney and the Office of the Independent Auditor
General, with the assistance of the City Administration, are directed to review the Amended and
Restated Ground Lease, the Amended and Restated Ground Lease for Retail/ Parking, and any
other pending Agreements with Flagstone related thereto, to determine if there are any other
current breaches.
Section 5. This Resolution shall become effective immediately upon its adoption and
signature of the Mayor.'
If the Mayor does not sign this Resolution, it shall become effective at the end of ten (10) calendar days
from the date it was passed and adopted. If the Mayor vetoes this Resolution, it shall become effective
immediately upon override of the veto by the City Commission.
APPROVED AS TO FORM AND CORRECTNESS:
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ria i : nd�ezz, C ty Attor iey 5/1612017